Third attempt to change legal newspaper rules fails in committee

PIERRE — For the third time during the current legislative session, legislation designed to change the way legal newspapers are defined in South Dakota has been defeated.

The latest attempt in Tuesday’s meeting of the Senate Commerce and Energy Committee was SB178, a hoghoused bill. A hoghouse occurs when a bill’s original content is replaced by an entirely new bill.

Earlier in the current session, the Senate Local Government Committee defeated SB80, which would allow free distribution newspapers to qualify as legal newspapers for the purposes of publishing public notices and SB183 which would have lifted the one year publication requirement before a newspaper is allowed to publish public notices.

SB178 was similar to SB80 in that it would allow a free distribution newspaper like the Dakota Scout in Sioux Falls to be eligible to publish public notices.

Much of the discussion in favor of the bill was aimed at criticism of the Sioux Falls Argus Leader, Aberdeen American News and Watertown Public Opinion. The three newspapers are all owned by Gannett, a national chain of newspapers. Gannett’s South Dakota publications have sharply cut their staffs and news gathering capabilities.

Speaking in favor of the legislation, Sen. Casey Crabtree, R-Madison, said current laws are “in a way forcing taxpayer dollars to be sent to a business that doesn’t exist here in South Dakota.”

Crabtree noted that times have changed since the current laws governing legal newspapers were put in place in 1985.

“It’s time to get this updated and provide an alternative path for South Dakota-owned newspapers,” Crabtree said.

Matt McCaulley, a lobbyist for the Independent Newspaper Association of South Dakota, a new organization, said that with the passage of SB178, much would stay the same for what he referred to as “1985 newspapers” as well as his clients, the “21st century newspapers.”

One change SB178 called for was getting both types of newspapers to make an annual report to the Secretary of State’s office of all the funds the newspaper received from South Dakota governmental entities.

The committee also heard from Jonathan Ellis and Joe Sneve, former Argus Leader reporters who founded the Dakota Scout, and Troy McQuillen, publisher of Aberdeen Insider, a start-up news website that plans to begin publishing a print edition this spring.

McQuillen said he was drawn to starting the news website when the Aberdeen American News quit employing reporters.

“I was encouraged by local politicians who are very frustrated with the current way our community is covered,” McQuillen said. “They do not like providing the legal notices to some outside company.”

Opposing the legislation was Justin Smith, a lobbyist for the South Dakota Newspaper Association. Smith noted it was difficult to prepare for testimony on a bill that was only a few days old and then got amended at the start of the meeting.

“This highlights the disorganization and really the last-minute nature of the bill,” Smith said. “This is an issue that is not so easy that we can deal with it in a couple of days.”

Calling the way the bill was written a “radical change,” Smith said, if the bill became law, a 21st century newspaper could compete for legal notices from any city or school board in the state.

Backers of SB178 characterize the bill as the last, best hope of a dying industry, Smith said. SDNA’s member newspapers “know that they either innovate and respond to customer preferences or they fail,” Smith said. “Our members’ businesses are thriving as a result.”

It would easy, according to Smith, for the new businesses to meet the long-standing requirements necessary to become legal newspapers. The new businesses prefer to change the rules legislatively, Smith said, “not because they cannot meet those requirements but because they do not want to meet those requirements.”

The current law, which requires a Periodicals class mailing permit from the U.S. Postal Service and allows for postal service audits, protects not only newspapers, but also governments, according to David Bordewyk, executive director of SDNA.

“The laws assure government entities that the public notices, such as school board minutes, are reaching the intended audience in a bonafide way,” Bordewyk said.

Sen. Lee Schoenbeck, R-Watertown, made a do pass motion. A critic of the current state of the Watertown newspaper, Schoenbeck explaining that he has always been a supporter of keeping public notices in newspapers.

“The reason I’ve supported it is because of the importance of a newspaper to be a check on the government and the roles that they play in building communities,” Schoenbeck said. “I view it as a flat out subsidy that I think it’s important that we do because the press is so critical to a functioning government.”

Before a vote could be taken on Schoenbeck’s motion, it was substituted by a motion from Sen. Steve Kolbeck, R-Brandon, to move the bill to the 41st day of the session, a tactic for disposing of legislation. Kolbeck noted that two bills that would change the rules governing legal newspapers had already been defeated handily during the session.

The committee endorsed Kolbeck’s motion on a vote of 5-4, killing the bill.